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Cobell v. Salazar

Court of Appeals for the D.C. Circuit
39 Envtl. L. Rep. (Envtl. Law Inst.) 20163, 387 U.S. App. D.C. 339, 573 F.3d 808 (2009)
ELI5:

Rule of Law:

When the government, as a trustee, is statutorily required to provide an accounting, a court of equity has the authority to adjust the scope and methodology of that accounting to balance the ideal of perfect accuracy against practical constraints such as cost and limited congressional appropriations.


Facts:

  • Since the General Allotment Act of 1887, the U.S. government, through the Department of the Interior, has held funds in trust for individual American Indians in Individual Indian Money (IIM) accounts.
  • The government historically mismanaged these trust accounts, resulting in the loss or destruction of critical financial records over more than a century.
  • In 1994, Congress passed the American Indian Trust Fund Management Reform Act, statutorily requiring the Secretary of the Interior to provide an accurate accounting of all funds held in the IIM trust.
  • Despite the 1994 Act, the Department of the Interior failed to deliver the required comprehensive accounting to the trust beneficiaries.
  • The government asserted that a complete, transaction-by-transaction historical accounting would be prohibitively expensive, potentially costing billions of dollars, which could exceed the total amount of recoverable funds.
  • Elouise Cobell and other IIM account beneficiaries initiated a class action lawsuit to compel the government to fulfill its statutory duty to provide an accounting.

Procedural Posture:

  • In 1996, beneficiaries of Individual Indian Money (IIM) trust accounts filed a class action lawsuit against federal officials in the U.S. District Court for the District of Columbia.
  • The district court found the government breached its trust duties and issued an injunction ordering an accounting, which the U.S. Court of Appeals for the D.C. Circuit affirmed in 2001 (Cobell VI).
  • Over several years, the district court issued further detailed injunctions specifying the terms of the accounting, which the D.C. Circuit vacated on multiple occasions, holding that the law did not mandate a 'cost-unlimited accounting' (Cobell XIII and Cobell XVI).
  • The district court then held that the government was in continuing breach of its duty and declared that a proper accounting was legally 'impossible' due to inadequate congressional funding (Cobell XX).
  • Based on its finding of impossibility, the district court ordered the government to pay the plaintiff class $455.6 million in equitable restitution (Cobell XXI).
  • The district court certified both its order finding impossibility and its monetary award for an immediate interlocutory appeal, which both plaintiffs and defendants petitioned the U.S. Court of Appeals for the D.C. Circuit to hear.

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Issue:

Does a court of equity have the authority to declare a statutorily required accounting of Indian trust funds 'impossible' due to cost and lack of congressional funding, and subsequently order monetary restitution in lieu of that accounting?


Opinions:

Majority - Chief Judge Sentelle

No. A court of equity does not have the authority to declare the accounting impossible and instead must craft a practical remedy that effectuates the statutory right to an accounting within realistic constraints. The 1994 Act gives the plaintiff class a statutory right to an accounting, which a court cannot simply extinguish by declaring it impossible. The essence of equity jurisdiction is the flexibility to 'mould each decree to the necessities of the particular case.' The district court erred by treating the scope of the accounting as a rigid legal requirement rather than a matter subject to equitable balancing of costs and benefits. Therefore, the court must use its equitable powers to order the best accounting possible given the finite resources Congress has appropriated, which may include cost-saving methods like statistical sampling and the exclusion of low-value transaction categories where the cost of accounting would exceed the recovery. Ordering a monetary award without an accounting is improper because it makes it impossible to determine which individual beneficiaries are owed what amounts.



Analysis:

This decision establishes that a statutory right to an accounting from the government is not an inflexible mandate for perfection regardless of cost. It empowers courts to use their equitable authority to craft pragmatic, cost-effective remedies when faced with massive and complex government obligations. The ruling prevents lower courts from simply substituting monetary damages for a difficult-to-perform statutory duty, instead requiring them to oversee a 'good enough' performance that balances beneficiary rights with the practical realities of public funding. This approach of allowing the 'achievable good' to take precedence over the 'theoretically perfect' provides a crucial framework for managing large-scale litigation against the government involving historical failures and limited resources.

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